Securities and Exchange Commission

Litigation Release No. 17806 / October 24, 2002

SEC v. William J. Pardue (United States District Court for the Eastern District of Pennsylvania, 02CV8048, filed October 24, 2002)

The Securities and Exchange Commission today filed a civil lawsuit for insider trading against William J. Pardue, a Devon, Pennsylvania resident who allegedly made more than $140,000 by misusing confidential information that Tyco International Ltd. planned to take over Central Sprinkler Corp. of Lansdale, Pennsylvania.

The Commission's complaint alleges that Pardue had worked for Central Sprinkler for over 20 years, rising to become a senior officer. At the time of his trading, he was still employed by the company as a consultant. According to the complaint, Pardue learned from his father-in-law, the former Chairman of Central Sprinkler, that Tyco was planning to acquire Central Sprinkler, and he illegally used the information to trade for his own personal profit.

In the weeks before Tyco's public announcement of the acquisition, Pardue spent over $200,000 to accumulate 13,100 shares of Central Sprinkler stock. After the acquisition was announced, Pardue sold this stock for a profit of $140,475.

In its complaint, the SEC charges Pardue with securities fraud in violation of Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder, based on illegal insider trading. The Commission seeks a permanent injunction, disgorgement of illegal trading profits, prejudgment interest and civil penalties.

The Commission wishes to acknowledge the assistance of the National Association of Securities Dealers in the matter.